[The Following Information Applies to the Questions Displayed Below

question 66

Multiple Choice

[The following information applies to the questions displayed below.]
Gamma Company adjusts its accounts at the end of each month.The following information has been assembled in order to prepare the required adjusting entries at December 31:
(1) A one-year bank loan of $720,000 at an annual interest rate of 6% had been obtained on December 1.
(2) The company's pays all employees up-to-date each Friday.Since December 31 fell on Tuesday,there was a liability to employees at December 31 for two day's pay.Employees earn a total of $12,800 per week.
(3) On December 1,rent on the office building had been paid for three months.The monthly rent is $7,000.
(4) Depreciation of office equipment is based on an estimated useful life of five years.The balance in the Office Equipment account is $12,360;no change has occurred in the account during the year.
(5) All fees totaling $19,800 were earned during the month for clients who had paid in advance.
-What amount of interest expense has accrued on the bank loan?

• A)$3,200
• B)$3,500
• C)$3,600
• D)$3,900

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